Predicted Shropshire Council overspend keeps growing as latest estimate passes £50m
Shropshire Council’s finances have again worsened, with the authority now predicting an overspend of more than £50 million.
A report sent to the Transformation and Improvement Overview and Scrutiny Committee and cabinet ahead of meetings next week show that the projected outturn position, as of October 31, was £50.746m – a deterioration of £3.677m from the last report just a few weeks ago.
Because the council’s General Fund Balance – also known as unearmarked reserves – stands at £34.280m, it has an unfunded overspend of £16.466m.
Officers and members are currently working under a declared financial emergency, with the ultimate aim being to ensure in-year spend is minimised and income maximised. An “in-principle” request for “exceptional financial support” has been made to the Ministry of Housing, Communities and Local Government (MHCLG) which if granted, would allow it to be in a legal position.
However, if it is not, it is highly likely that a Section 114 notice will be issued, meaning that Government commissioners will be brought in to effectively run the council.
James Walton, the officer who has ultimate responsibility for Shropshire Council’s finances, says the authority’s financial position is “significantly complicated”. This, he says, is due to funding for transformation activity through to the end of the financial year from capital receipts generation, and funding for the North West Relief Road (NWRR) should it be cancelled and/or unfunded by the Department for Transport.
Therefore, a “three-step plan” has been created to manage the council’s revenue monitoring position for the current year:
Setting a proposed minimum value for General Fund Balance of £5m by the end of the financial year to ensure sufficient resilience to “unknown shocks”
Creating a contingency fund from earmarked reserves of £5.478m to help manage the financial risks identified within the adverse scenario and help reduce reliance on General Fund Balances from known risks
Continuing active discussions with the MHCLG to request exceptional financial support for 2025/26 and future years
Mr Walton says an application of £21.466m has been identified to support revenue monitoring projections. The “in-principle” exceptional financial support application also includes up to £10m to support funding for transformational activity, and up to £38.805m to write off spending related to the NWRR. That means the total amount is up to £71.361m – higher than the previously reported figure of £64m.
Mr Walton says that is due to the anticipation of completing the detailed financial review in period seven. Therefore, he and interim chief executive Tanya Miles have discussed a figure of up to £75m with the MHCLG. A formal application will be made next month, according to the process yet to be confirmed by the MHCLG.
Therefore, it is proposed that a period eight financial monitoring report will not be completed, enabling senior officers, budget holders and the finance team to focus on establishing the 2026/27 budget and the medium term financial strategy.
